One hundred-fifty years ago William Tecumseh Sherman was engaged in the early efforts to put down the rebellion in the southern slave states. He had the idea that it would require several hundred thousand troops. The savvy people of the day seriously thought that Sherman was crazy. After the war and more than a million soldiers later Sherman had another insightful comment:
The federal government, having caused the recent economic turmoil and the resultant recession by an elaborate and pervasive system of guaranties and subsidies, then precipitating a financial panic with massive intervention programs that drove investors out of the markets, quickly followed up with new laws to take over the healthcare and financial systems, simultaneous with uncontrolled spending. The government has tried all that it can do—and far more than it should do. The government’s quack medicine recurrently and unpredictably applied, like in the 1930s, is making sure that private initiative has little chance for recovery.
This highlights the fundamental question: do you or do you not trust people. This is not a new question. It is as old as government, which is practically as old as time. The evidence of the ages is clear: trusting people is the only economic system that works.
The reason is not complicated. Government economic programs are run by men and women making decisions about things that they do not fully understand, applying their own incentives to other people’s money, property, and talents. As smart as these men and women might be—and they are neither smarter nor dumber than the rest of the population—they are not smart enough to know enough to run an economy of over 300 million individuals making billions of economic decisions every day. No mortal is, and until the Second Coming of Christ government remains in the hands of the mortals.
Fortunately, if you trust the people you do not need to make their choices for them. Leave them alone, and they will know best how to invest their money, how to create new jobs, how to invent new products, how to be more efficient, and they will do it in the best ways that they know how, because their own money, resources, and reputations are on the line. Those who are best at these many tasks will succeed the most.
Because government has different incentives and does not work that way, the founders of the United States adopted a government whose founding document begins with the words, “We the People”. Today we have a changing system of government, increasingly based upon the idea of, “You the People”, and it is not working very well. That formula never has.
My opinion is, the country is doctored to death, and if President and Congress would go to sleep like Rip Van Winkle, the country would go on under natural influences, and recover far faster than under their joint and several treatment.We need more Shermans today. No one knew better than Sherman what government could do militarily. He also knew its limitations and understood that military competence does not transfer to economic competence.
(William T. Sherman, letter to General Ulysses S. Grant, February 14, 1868, in William Tecumseh Sherman, Memoirs of William T. Sherman, p.922)
The federal government, having caused the recent economic turmoil and the resultant recession by an elaborate and pervasive system of guaranties and subsidies, then precipitating a financial panic with massive intervention programs that drove investors out of the markets, quickly followed up with new laws to take over the healthcare and financial systems, simultaneous with uncontrolled spending. The government has tried all that it can do—and far more than it should do. The government’s quack medicine recurrently and unpredictably applied, like in the 1930s, is making sure that private initiative has little chance for recovery.
This highlights the fundamental question: do you or do you not trust people. This is not a new question. It is as old as government, which is practically as old as time. The evidence of the ages is clear: trusting people is the only economic system that works.
The reason is not complicated. Government economic programs are run by men and women making decisions about things that they do not fully understand, applying their own incentives to other people’s money, property, and talents. As smart as these men and women might be—and they are neither smarter nor dumber than the rest of the population—they are not smart enough to know enough to run an economy of over 300 million individuals making billions of economic decisions every day. No mortal is, and until the Second Coming of Christ government remains in the hands of the mortals.
Fortunately, if you trust the people you do not need to make their choices for them. Leave them alone, and they will know best how to invest their money, how to create new jobs, how to invent new products, how to be more efficient, and they will do it in the best ways that they know how, because their own money, resources, and reputations are on the line. Those who are best at these many tasks will succeed the most.
Because government has different incentives and does not work that way, the founders of the United States adopted a government whose founding document begins with the words, “We the People”. Today we have a changing system of government, increasingly based upon the idea of, “You the People”, and it is not working very well. That formula never has.
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